This year saw higher production…
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India’s government has asked its largest state-held firm Oil and Natural Gas Corporation (ONGC) to seek the listing of its overseas operations unit ONGC Videsh, in a bid to raise funds from selling state assets, Reuters reported on Tuesday, quoting a letter it has seen.
According to the letter from the Department of Investment and Public Asset Management sent to ONGC last week, India is looking to unlock the value of the overseas unit of ONGC, in which the government holds 67.452 percent. ONGC Videsh, a wholly owned subsidiary of ONGC, owns participating interests in 41 oil and gas assets in 20 countries.
Any government-held entity with positive net worth and no losses should be listed in order to unlock more value, according to the letter to ONGC that Reuters has seen. The document didn’t specify what percentage of ONGC Videsh should be sold to investors.
A possible listing of ONGC’s overseas arm would help India to reach its ambitious government target to raise the equivalent of around US$14.37 billion (1 trillion Indian rupees) from proceeds of state asset sales during its current fiscal year through March 31, 2019.
According to Reuters estimates, ONGC Videsh booked a net profit of the equivalent of US$152 million and contributed 5 percent to ONGC’s total net profit in the latest FY 2018 fiscal year that ended in March.
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Following a loss in the financial year 2016, and a return to profit in FY 2017, ONGC Videsh further raised its profit after tax (PAT) in FY 2018. The overseas unit of ONGC booked its highest ever production in the latest fiscal year, raising output by 11 percent compared to the previous fiscal year, according to an ONGC presentation in May. ONGC Videsh holds interest in 15 producing assets outside India. In FY 2018, the biggest share of its production came from Russia: 56 percent of its total overseas production.
In one of its latest overseas acquisitions, ONGC Videsh led an Indian consortium of ONGC Videsh, Indian Oil Corporation, and Bharat Petro Resources, which signed in February this year a deal to buy 10 percent in the Lower Zakum Concession offshore Abu Dhabi—the first time that Indian oil and gas firms have been given a stake in the development of Abu Dhabi’s oil and gas resources.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.